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EXHIBIT 10(z)
February __, 1997
Lexington State Bank
Trust Department
Post Office Box 867
Lexington, North Carolina 27293-0867
Gentlemen:
In connection with your appointment as Subscription Agent in the
transactions described herein, Wellington Hall, Limited (the "Company"), a North
Carolina corporation, hereby confirms its arrangements with you as follows:
1. The Offerings. The Company is offering to holders of its common
stock, no par value (the "Common Stock") at the close of business on February
___, 1997 (the "Shareholders") the nontransferable right to subscribe for one
additional share of Common Stock for each share then owned (a "Right").
Shareholders desiring to participate in the Offerings must subscribe for a
minimum of 1,000 shares of Common Stock. Except as set forth under Paragraph 8
hereof, Rights shall cease to be exercisable, and the offering of Common Stock
pursuant thereto (the "Rights Offering") will terminate, at 5:00 P.M. Eastern
Standard Time on __________ __, 1997 or such later date until which the Company
notifies you in writing that it has extended the Rights Offering (the
"Expiration Time").
Prior to the Expiration Time, each Shareholder may subscribe for more
shares than his Rights entitle him to purchase (the "Subscription Offering"). If
the Shareholders in the aggregate do not subscribe for the maximum number of
shares to which they are entitled in the Rights Offering, such remaining shares
will be sold to Shareholders who have subscribed therefor prior to the
Expiration Time. To the extent more shares are subscribed for than are available
in the Subscription Offering, the available shares will be pro rated among the
subscribing Shareholders therefor based on the percentage that the amount of
shares that each Shareholder subscribed for over those which his Rights entitled
him to purchase in the Rights Offering bears to the total amount of shares that
all Shareholders in the aggregate subscribed for over those which their Rights
entitled them to purchase. Notwithstanding the foregoing, for purposes of
calculating the above-referenced percentage, all Shareholders who subscribed for
the minimum number of 1,000
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February 14, 1997
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shares in the Offerings will be treated together as a single Shareholder, with
their excess subscriptions aggregated. Each such Shareholder will then be
allocated an equal portion of the percentage of available shares as calculated.
Any shares that are not sold in the Rights Offering or the Subscription
Offering may be sold to persons who are not directors, officers or Shareholders
of the Company (the "Public Offering"). A subscriber in the Public Offering must
subscribe for a minimum of 10,000 shares. The Public Offering will terminate
within 30 days of the Expiration Time, unless extended by the Company (the
"Public Offering Termination Time"). The Company will notify you in writing of
the Public Offering Termination Time.
Any subscription pursuant to the Offerings in excess of 100,000 shares
is subject to the approval of the Board of Directors of the Company, except to
the extent that a Shareholder is entitled to subscribe for such shares in the
Rights Offering.
The Offerings will be conducted in the manner and upon the terms set
forth in the Prospectus dated February ___, 1997 (the "Prospectus") and related
Stock Order Form (the "Stock Order Form"), which terms are incorporated by
reference herein and made a part hereof as if set forth in full.
2. Nominees. Banks, trust companies, securities dealers and brokers
that hold Common Stock as nominees ("Nominees") for more than one beneficial
owner shall be entitled to subscribe for Common Stock in the Rights Offering and
the Subscription Offering on the same basis as if the beneficial owners were
record owners, provided that such Nominees furnish evidence of the number of
shares of Common Stock owned by each beneficial owner.
3. Appointment of Subscription Agent; Establishment of Escrow Account.
You are hereby appointed as Subscription Agent to effect the Rights Offering,
Subscription Offering and Public Offering (collectively, the "Offerings").
Following execution of this letter by you, you shall establish a money market
account (the "Escrow Account") for the deposit of subscription funds from the
Offerings as described herein.
4. Delivery of Documents. Enclosed herewith are the following, the
receipt of which you acknowledge by your execution hereof:
(a) a copy of the Prospectus;
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February 14, 1997
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(b) the form of letter from the Company to the
Shareholders informing them of the Rights Offering
and the Subscription Offering;
(c) the form of Stock Order Form;
(d) resolutions adopted by the Board of Directors of the
Company and certified by the Secretary or Assistant
Secretary of the Company approving the Offerings.
5. Subscription Procedure. Upon your receipt prior to the Expiration
Time (by mail, hand delivery, or otherwise) of (i) any Stock Order Form and (ii)
payment in full of the Offering Price set forth on the cover page of the
Prospectus (the "Offering Price") multiplied by the number of shares of Common
Stock subscribed for, you shall place such payment in the Escrow Account and,
within two business days, provide the Company with a copy of each such Stock
Order Form. If a Stock Order Form is not accompanied by full payment of the
Offering Price, you should place such partial payment in the Escrow Account and,
within one business day, provide the Company with a copy of the Stock Order Form
and advise the Company of the deficiency. The Company shall be responsible for
determining the adequacy and completeness of all Stock Order Forms.
Promptly following the Expiration Time, both you and the Company shall
calculate, in accordance with the terms and conditions of the Offerings, the
number of shares to be issued in the Rights Offering and the number of shares to
be issued to any Shareholder who has subscribed for shares in the Subscription
Offering in excess of those that he is entitled to purchase pursuant to the
exercise of his Rights. If the number of shares to be issued to any particular
Shareholder in the Subscription Offering is less than that for which he
subscribed, you shall refund promptly, without interest or reduction, that
portion of his payment attributable to such unavailable shares.
Promptly following the Expiration Time, both you and the Company also
shall calculate, in accordance with the terms and conditions of the Offerings,
the number of shares available for purchase in the Public Offering. If no shares
are available for purchase in the Public Offering, you shall refund promptly to
each subscriber in the Public Offering, without interest or reduction, his
entire subscription payment. If shares are available for purchase in the Public
Offering, then shares will become issuable to subscribers in the Public Offering
upon acceptance of subscriptions by the Company. At or from time to time prior
to the Public Offering Expiration Time, the Company will advise you in writing
that it has accepted or rejected such subscriptions. To the extent subscriptions
are rejected, you shall refund promptly to each such subscriber, without
interest or reduction, the entire payment attributable to the rejected
subscription.
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All subscription checks or money orders shall be made payable to the
order of you. All refunds to be paid to any subscriber in the Offerings shall be
paid by bank check sent to the address designated on the appropriate Stock Order
Form after the subscriber's funds have cleared normal banking channels and are
in the form of cash.
6. Delivery of Funds and Documents to the Company; Issuance of Shares.
Promptly following calculation of the number of shares to be issued in the
Rights Offering and the Subscription Offering pursuant to the foregoing
paragraph, you shall deliver to the Company (i) the proceeds of shares sold in
the Rights Offering and Subscription Offering, together with interest accrued
thereon, less any fees and expenses not previously paid and owed you pursuant to
this letter and (ii) the original Stock Order Forms with respect to such shares.
If shares are available for sale in the Public Offering and are subscribed for,
then, promptly following your receipt of written instruction from the Company
from time to time indicating that it has accepted subscriptions in the Public
Offering, you shall deliver (i) the proceeds of shares sold in the Public
Offering pursuant to such accepted subscriptions, together with interest accrued
thereon, less any fees and expenses not previously paid and owed you pursuant to
this letter and (ii) the original Stock Order Forms with respect to such shares.
No funds shall be disbursed to the Company until they have cleared normal
banking channels and are in the form of cash. The Company is responsible for
coordinating with its transfer agent the issuance and delivery of stock
certificates to subscribers for Common Stock sold in the Offerings.
7. Defective Subscription. The Company shall have the right either to
reject any defective subscriptions or to waive any defect in subscriptions other
than a failure to pay the full Offering Price.
8. Late Delivery. If prior to the Expiration Time you receive a written
or telegraphic guarantee from a commercial bank, a trust company having an
office in the United States, or a member firm of the New York Stock Exchange,
another registered national securities exchange or the National Association of
Securities Dealers, Inc., stating the name of the Shareholder, the number of
Rights to which such Shareholder is entitled and the number of shares of Common
Stock subscribed for and guaranteeing that the Stock Order Form and the Offering
Price will promptly be delivered to you, such subscription may be accepted
subject to the Company's withholding the stock certificates for such shares of
Common Stock until receipt of the duly completed and executed Stock Order Form
and payment of the Offering Price within five (5) business days after the
Expiration Time.
9. Reports. Within one business day of request by the Company, you
shall provide to the Company by telephone (Mr. Hoyt Hackney at (910) 249-4931 or
his designee) requested
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February 14, 1997
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information about the names of Shareholders or other persons who have subscribed
for shares in the respective Offerings, the number of shares subscribed for by
each such Shareholder or other person, the total numbers of shares subscribed
for and any other pertinent information with respect to subscriptions. Upon the
Expiration Time and, if different, the Public Offering Expiration Time, you
shall provide the Company with such final reports as it shall reasonably
request.
10. Future Instructions. You may rely and act on any written
instruction signed by Hoyt Hackney with respect to all matters pertaining to
this letter and the transactions contemplated hereby.
11. Payment of Expenses. The Company will pay you compensation for
acting in your capacity as Subscription Agent hereunder in accordance with
Schedule I hereto and will reimburse you for all reasonable and necessary
expenses that you incur in so acting.
12. Indemnification. The Company covenants and agrees to indemnify and
hold you harmless against any costs, expenses (including reasonable fees for
legal counsel), losses or damages, which may be paid, incurred or suffered by or
to which you may become subject, arising from or out of, directly or indirectly,
any claim or liability resulting from your actions as Subscription Agent
pursuant hereto; provided that such covenant and agreement does not extend to
such costs, expenses, losses and damages incurred or suffered by you as a result
of, or arising out of, your own negligence, misconduct or bad faith or that of
any employees, agents or independent contractors used by you in connection with
performance of your duties as Subscription Agent hereunder.
13. Notices. Unless otherwise provided herein, all reports, notices and
other communications required or permitted to be given by you hereunder shall be
delivered by hand or mailed by first class mail, postage prepaid, as follows:
(a) If to The Company , to:
Wellington Hall, Limited
Route 1, U.S. Highway No. 29 and No. 70
Lexington, North Carolina 27292
Attention: Mr. Hoyt M. Hackney, President
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February 14, 1997
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(b) If to you, to:
Lexington State Bank
Trust Department
Post Office Box 867
Lexington, North Carolina 27293-0867
Attention: Clark Dillon
If the foregoing is in accordance with your understanding of our
arrangements, please sign and return the enclosed duplicates of this letter.
Very truly yours,
WELLINGTON HALL, LIMITED
By:
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Hoyt M. Hackney
President, Chief Executive Officer,
and Chief Financial Officer
The foregoing is in accordance with our understanding and is hereby
confirmed and accepted.
LEXINGTON STATE BANK
By:
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Title
Dated: February ___, 1997
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SCHEDULE I
FEES AND EXPENSES OF
SUBSCRIPTION AGENT
Acceptance Fee $200.00
Account Maintenance $100.00
Receipt of Subscription Payments $1.00 per payment
Document Review $2.50 per form
Administration $600.00
Refunding Correspondence $20.00 per item
per recipient
(Company and/or
subscriber)
Calculation per Agreement $100.00 per calculation
Final Reports requested by Company $100.00 per report
MINIMUM FEE $2,500.00